Because Once a Week…You are Entitled to My Opinion!

Weekly Real Estate Industry News, Opinion & Humor

Archives for March 2014

Greer Goes Global will be represented by more than 24 countries Saturday, March 29. Activities will range from a parade of nations to tai chi. Local residents are putting in their all to represent their culture. They bring arts and crafts from their homelands.

One major part of the Festival is the food. Food is one of the largest parts of any culture. The festival has been in planning since November, a short amount of time, say locals.

For now, the festival is small. But residents want to expand in the coming years and have plans on how to do it.

After reading some of the recent industry hoopla about Lawsuit this, NAR that, and Syndicator the other, and seeing the typical HUGE level of astroturf that the real estate industry seems to tolerate, I thought it would be a GREAT idea to start pointing out all of these CRAP (completely ridiculous astroturf practices) to the general Broker and Agent populace and start ridiculing those who do it in the hope that it will stop.

If you cannot get REAL comments in support of your position, it is POSSIBLE that you should reconsider it. 😉

Not sure what ASTROTURFING is? Well it is a marketing term for simulating a “grassroots” movement in a non authentic way to make your cause seem inevitable / to win people over to your point of view. Take a look at the link to its definition in Wikipedia.

Why do syndicators, bloggers with weak ethics, franchisors, sometimes MLSs and yes even vaunted “news” organizations within the real estate industry feel the need to engage in Astroturfing? Because it works. That said, if you are one of these folks, you have been warned.

The real estate industry often does a more subtle form of astroturfing than its political counterparts. Often they will offer influential bloggers indirect inducements for endorsements. It will never be a direct quid pro quo, but there will be an implied hook, consulting work, advertising and then voila there will be unwavering support of a position in spite of all else. One could argue that this is just the way the game is played and that it is just the good ole boys club.

Okayfine.

But when we see an article posted and we then see the first 4 comments be GUSHING praise about it and how it is going to help the industry. It MIGHT be Astroturf. And it MIGHT be less than objective, no?

If we see people magically appear ONLY in the comments when they are about a certain syndicator. It MIGHT be Astroturfing. And it might be less than objective, no?

Not naming ANY names at present, but you have been warned. 😉 #justsayin

Ok. So I get this “Newsflash” from Inman offering the inside scoop on why Errol Samuelson left Move, Inc. for Zillow. So I watched it. I knew in advance that it was going to be a puff piece. No hard questions. Just a lot of “How does that make you feel?” softballs answered with “I really love innovation.” And of course the “I love Zillow” references in the typical first few comments to the video.

Oh, you did not see it? Here is a link. Feel free to have at it. I have nofollowed the links just link Zillow so often does on your listings, an indication that I do not trust the source. Accurate assessment. None of this 15 minutes of “I love innovation.” and “The guys at Zillow have vigorous debates!” matters at all. Seriously. Does this move the needle and change anything? Not a all.

So let me try to talk about what does indeed really matter, and let’s see if we can keep the main thing the main thing.

1) Zillow hired Errol and other executives away from Move because their market cap was roughly 10 times that of Move and they have the cash and burn rate to do so. And because buying executives is much less expensive than buying a whole company. Please someone disagree with me on this. I am not saying it is wrong. I AM saying that this is why it was done.

2) Zillow is NOT profitable, but it is awash in investors cash at the moment. Unless they GET profitable, their house of cards is likely to crumble. They NEEDED to have something to show investors and they CANNOT show a profitable company, so they did the next best thing. Buy executives who will tell everyone how cool of a company Zillow is and imply that Move is dead opposite and an old stick it the mud.

3) Errol is a very well spoken and slick PR person. That much is obvious. The fact that he left without any notice from the C-suite of a publicly traded firm makes his lack of morals and ethics is equally obvious. That is not a comment on Zillow. You had to know that they would take a shot at hiring him. The fact that he accepted and HOW he left is a comment on him personally.

4) Errol has added the role of some token software development which is what he spent most of his time talking about. He could be the janitor for all Zillow cares. The purpose in hiring him was to take him away from Move and not because he is some “wunderkind” that will add software development expertise to the equation. Seriously. And let’s be honest. He has NO value as a liason between Zillow and the industry. The industry is SUING him and ANYONE who thinks that Zillow did not think that the industry would have sued him is extremely shortsighted. So again, what is his value to Zillow? Investor Conference call show pony. Period.

5) It is now more apparent than ever that Zillow is LOOKING to make a deal with a big brokerage chain or to BECOME a big brokerage. That is the ONLY way that they can get to profitablility. Errol’s continued reference to the advertising model in the video is an insult. Your market cap is well over 3 Billion of a doggone website. You have virtually NO hard assets. House of cards? Cotton candy? Chinese food? ALL are applicable analogies.

6) Errol, you indicated that you are all about transparency. Were you transparent to your former employer that you were dissatisfied? Were you transparent that sans opportunities to grow you would be leaving? or did you simply screw them over on purpose? I think those are fair questions, sir.

So all in all, it is a nice attempt at a PR spin move for Friday afternoon, but lacks substance. Why REALLY did you leave for Zillow? It is the money. It is always about the money in the end, no? smh. Just my opinion.

The Betrayal. The 30 piece of silver. The Accusations of Insider Knowledge going to a direct competitor. The Zillow vs Move, NOW it’s personal spin. The computer that was not (allegedly) returned. The lawsuit filing that was distributed to the blogosphere and press. Ahh…the drama…the drama indeed.

What does Errol-gate REALLY say about who the players are and more importantly their character? Here are 10 observations of mine that I offer for your consideration. Before we begin, let’s start with Exhibit A. The Court Filing. Bailiff, if you will provide that? Thanks. Here it is. If you are in our industry, PLEASE read this.

Observation 1: Errol Samuelson (if Move Inc is correct in their view of how this went down) is a poor excuse for an ethical business person. That is putting it as mildly as possible. If this is NOT the way things transpired, then Errol needs to defend himself and quick. Accusing Errol of meeting with ALL of Zillow’s top brass is strong stuff. Accusing him of wiping the data off of the company laptop is strong stuff. Remember that we are talking about a person in the C-Suite of Move for over a decade, with knowledge to the inner workings.

Observation 2: Move Inc, under anybody’s definition is not being run correctly. We are seeing executives leave en masse. Not a good thing at all. There is a reason that they are more profitable and yet Wall Street values Zillow at 10x their value. I think BOTH are overvalued, but I am just sayin. What kind of an outfit are they running there when their core folks are heading to the exits?

Observation 4: For Zillow, buying Samuelson comes at more of a price than first blush would show. They hired Samuelson to screw over R.com. They CANNOT have been doing it to honestly use him as an industry liason…otherwise they would have made this a lot cleaner and kept the relationships intact. And they had EVERY opportunity.

Observation 5: For Zillow, this DOES prove that they have a well thought out scheme in mind to eradicate R.com by buying executives. Good thing Judas Goats are on sale cheap these days.

Observation 6: For REALTORS, if you think that Zillow is NOT here to take over the industry and supplant as much of the brokerage / realtor / MLS space as technology will allow and then jack up the price to support their valuation, you are smoking something from Colorado. If you are a team or brokerage paying for leads and you think that Zillow is a PARTNER… you are about to find out that this partner relationship is temporary, parasitic, and expensive.

Observation 7: These lawsuits, and there will be more, are going to be the soap opera of the year for 2014. And it does not matter who wins. We know who the loser is already. Who do you think will end up paying the legal bills? REALTORS or SHAREHOLDERS. Those are the only two options. Both are correct potentially.

Final Observations: This pretty much illustrates that Zillow and Move are arguing over the right to ravage the REALTOR. While I cannot blame Zillow for trying to hire competitors, I feel totally justified in saying that it was slimy the way that they did it. Further, if you are hiring Errol as an industry outreach person, you do not go about it this way. If you are hiring them to dig a ditch for a competitor, then this is TEXTbook.

This smacks of a lack of leadership at Move on a scale that I cannot imagine. It means that the emperors leading the people who own the rights to use the term REALTOR basically have no clothes, and they are not managing their people well at all.

And it illustrates that the rats who are jumping ship are just that. Rats. They are looking for a liferaft to support their lifestyles. I cannot fault them for that. But as I said with Zillow. I can fault them for HOW they do that. It seems that this high drama in our industry really speaks the most about THEIR character.

But the truth of what WILL actually be said in the next Zillow Investor conference call SHOULD go like this IF investors knew what was going on in the industry in my personal estimation.

Spencer: We are winning in the ongoing battle against Move Inc for dominance in the real estate industry.

Investors: Ummm…but you spent $108MM and ended 2013 with a LOSS of $12MM

Spencer: As further proof of that strategy working, we have lured away one of Move,Inc’ key executives…Errol Samuelson.

Investors: What does that have to do with anything and why are you wasting MORE money on increasing your burn rate? How much did he COST us to acquire?

Spencer: Errol has been a well respected figure in the real estate industry for years. blah. blah. blah.

Investors: Ummm..your financials are looking awful and we do not see how you can make enough money from REALTORS to pay us back?

Spencer: Errol Samuelson leaving Move really means that we are close to finishing them off.

Investors: But Boards of REALTORS are dropping you and others are considering it. How are you going to contend with that.

Spencer: Errol Samuelson. And when we beat R.com to a pulp. Errol Samuelson.

Investors: But Errol has lost all credibility and will not be able to sway virtually ANY of the MLSs given how he left Move? The MLSs were against Zillow because Zillow has sucky Zestimates and cannot seem to keep the listings up to date. Having a smooth talking spokesperson does not change that.

Spencer: Errol Samuelson. End Game Strategy. And when Errol Samuelson is not at Move, they will lower their marketing spend so we can too, but in the meantime it is a GOOD thing that our market cap is huge and that we can throw your money away at breakneck speed so that we can finish off our competitors.

Investors: Ummm… even if you did your financials would still look AWFUL.

Spencer: Erroll Samuelson. Outreach. Grope the REALTORS. Erroll Samuelson. We think they have more money.

Investors: Ummm…no they don’t. You should have learned that by spending 108 Million in 2013 on marketing to less than 250,000 of them that have any marketing budget to speak of. You went from slightly profitable to way unprofitable.

Spencer: Errol Samuelson. Grope the MLSs. Find the money. Somebody will pay. He can accomplish what Bob Bemis was unable to. We GOTTA have the listings or we’re toast. Errol Samuelson. Get dominance. Errol Samuelson.

Investors: The REALTORS are getting wise to the fact that you are going to HOSE them. How is Erroll going to do any different than Bob Bemis or anyone else?

Spencer: Errol Samuelson. He walks on water. We bought him. We own him. He will make us whole.

Investors: With him leaving Move, what happens if their stock price DROPS and REALTORS are smart enough to buy BACK their BRAND and then create a NATIONAL MLS that works like Canada’s??

Spencer: Errol Samuelson. Strategy. MBA speak. Errol Samuelson.

Investors: No seriously. You have 3+ BILLION of our equity in your hands, WHAT would happen IF REALTORS bought back REALTOR.com buy buying a controlling amount of shares of MOVE, Inc?

Spencer: Umm… well…if that happens then you, the investors are screwed. And I am going to enjoy a vacation. Oh yeah. And the Trulia investors are HOSED as well. Errol Samuelson.

<end of parody>

The truth of this is plain to see:

Move Inc. is a bumbling mess. Check out Rob Hahn’s post to see what a furious CEO who got blindsided sounds like:

Bob SUGGESTS to Move Inc that they should give REALTOR.com back to NAR. (I hope this happens!! But I am not holding my breath) Regarless of traffic they are still making money and Zillow is not.

That said, my prediction is that Move, Inc will continue to spend on marketing in the ongoing war to ravage the REALTOR unless their stock price tumbles. (It is less about traffic and MORE about how deep they can reach into REALTOR wallets. Their price to earnings ratio at their current market capitalization of 497 MM is 925.44 (in English, that means if you are investing, you ain’t very profitable AT ALL)…but compared to Zillow they are a bargain. Zillow’s market cap is over 3 Billion (that is 6 times Move, Inc…kids….that is a pile of money) and they are not even profitable. Sooner (rather than later), Wall Street HAS to realize that this is overheated. Insiders certainly have. 🙂 Or REALTORS are going to pay everything that they own and THEN some…to Zillow to support a stupid valuation.

Errol is not the savior. (But you can BET that Spencer will sell him that way to Wall St.) And the bottom line is this. The future of ALL of these companies lies in the hands of the people who actually own the data. The brokers. If they start deciding to pull their listings from syndication as many have recently, Zillow becomes a house of cards. As does Trulia. And for that matter as does R.com.

MLSs: Pay attention: When Errol comes knocking with Roses, a bottle of wine, and the promise of dinner at the best restaurant in town…remember that the fundamentals have not changed. And the brokers / MLSs have more power now than they have had in years to just say no.

This St Patty’s Day will feature a run/walk to raise awareness and funds for Make-A-Wish Foundation of South Carolina. The race will start on South Main St. and will take a loop around several major parts of the city.

Participants should report at 6:30am at Fluor Field to register. The race 8:00am and ends at 10:00am.Photo by tfangel

It was announced yesterday that Errol Samuelson left Move Inc (Realtor.com) to join Zillow to oversee their “Industry Outreach”. What does this mean for the Industry? What does this mean for Zillow? What does this mean for Trulia? What does this means for Move, Inc?

It IS a BIG DEAL in terms of headlines. Realtor.com president quits and joins Zillow. That will make some headlines for sure.

But what does it change really?

In my estimation, not much.

Wha?? You don’t think the Top Dog at Realtor.com leaving for Zillow is a game changer? No. I don’t. Big News? yes. Game Changer? No.

What is he REALLY going to do? Outreach to the Industry? Is he going to convince hordes of REALTORS to join him and Zillow and stick their thumb in the eye of R.com? No. Simply not going to happen. This was more of a symbolic “take down” of R.com by Zillow. A “See we can write a big check and buy one of your execs” than anything.

Move Inc lacks leadership. And vision. And a rudder. And a spine. But the real problem that is CAUSING THAT is not the people. It is that while they SAY that they are different from Zillow, they are not. They are every bit a third party syndicator and NOT the property of the REALTORS as a whole. That is the elephant in the living room. Executives at the top of Realtor.com cannot effectively articulate WHY they are better because they are no different. Just another third party syndicator…except with the REALTOR brand and an attitude.

So maybe if a BUNCH of executives was to leave Move Inc, and MLSs bought it back and it was not a third party entity because the stock price dropped… then maybe.

I also do not believe the Realtor.com line on this… that it is no big deal…and that there are big plan in the works. Listen, your big exec was disloyal and left to work with a competitor. You are scrambling. Own it.

And I don’t beleive the Zillow line either. This is not a game changer. This is a buyout of a big executive from a competitior to prove a point and more importantly to make headlines to DISTRACT from the real problem that Zillow has: Their books. They NEEDED a headline for the conference call. They needed to be able to say: We are winning against the competition. And paying Errol to jump ship was convenient and cheap compared to the other options. They don’t NEED more industry outreach. They NEEDED a conference call pony. They got one. Kudos.

Three years from now will Errol make a big impact. Maybe, but not likely. How much more “outreach” can an Industry take? REALTORS have been getting groped en masse for years. One more guy doing the groping is not going to move the needle. #justsayin

Ok. I don’t know much about stocks. But I do know that when the guys that own the company or are privy to the inner working sell, it is something to consider. To quote Forrest Gump, “Mama always told me, Stupid is as stupid does.”. So I am SURE that there is a logical explanation for the insider trades at Zillow, Trulia. MOVE, Inc insiders seem to be trading in a more “normal” range. Just not sure I can explain it. Perhaps they can. Could it be that Z and T are overvalued and they see it?

So without further ado, I post this without comment. (note: Source is NASDAQ)

Zillow – (click to expand) Look at the ratio between sells and buys for insiders

On 02/27/14, RICHARD BARTON N,Executive Chairman reported a net SELL trade of Z with a net transaction amount of $3,751,942. Net non-zero shares traded: 43641. See below for more information on Zillow, Inc. with symbol Z traded on the NasdaqNM. Original SEC Filing Period of Report: 2014-02-26

I am (on purpose) posting this without much comment other than to say that my dad used to always tell me that when you want to SEE what people’s intentions are, the best practice was to follow the money. I appreciate Russ Shaw posting this on Facebook and was glad I found it. Some people may think that someone dumping that much stock at one time as not a big deal. For me it confirms what I need to know.

If I was basing my growth / leads / marketing around a company, I (personally) would choose one where the insiders are running TOWARD the fight rather than away from it. But that is just me. Essentially, if they are selling, should I be buying? Hmm?